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NSE (Nifty): 15693

Technical Outlook

* The equity benchmark started the week on a positive note but minor profit wiped out initial gains. The daily price action formed a bear candle with small lower shadow, indicating extended breather amid stock specific action. In the process, Nifty midcap and small cap scaled to fresh all-time high, highlighting relative outperformance

* The shallow price correction along with prolonged time consolidation helped the index to approach maturity of price/time wise correction. During ongoing consolidation, the index retraced its May rally by just 38%, indicating shallow retracement. Timewise, the index has not corrected for more than three consecutive weeks in a row since April 2020. We expect it to maintain the same rhythm by arresting ongoing corrective phase in coming weeks as the index has already corrected over past two weeks. Hence, dips should be capitalized as incremental buying opportunity amid Q1FY22 earning season

* The lack of faster retracement on either side signifies prolonged consolidation (15900-15500) amid stock specific action. Therefore, couple of weeks breather would present incremental buying opportunity to ride next leg of up move. Eventually we expect Nifty to challenge the upper band of consolidation (15900) and gradually head towards 16100 in coming weeks as it is confluence of:

* a) price parity of post Budget rally (13597-15432), projected from April low of 14151, at 16055 • b) past two month’s range (15140-14150) breakout target at 16120 

* The broader market indices endured their relative outperformance as Nifty midcap and small cap scaled to fresh all time high. We expect broader market to continue with its northbound journey in coming weeks

* Structurally, we believe past five week’s consolidation helped index to form a higher base at 15600-15500 zone, which we do not expect to be breached as it is confluence of: a) 61.8% retracement of past four week’s rally (15145-15915), at 15440 b) 10 weeks EMA at 15478

In the coming session, index is opening on a positive note tracking firm global cues. We expect Nifty to maintain a higher high-low formation. Hence, use intraday dip towards 15750-15775 to create long for target of 15863.

NSE Nifty Daily Candlestick Chart 

Nifty Bank: 35198

Technical Outlook

* The daily price action resulted in a high wave candle with a higher high -low as the index is seen forming a higher base around 35000 levels signalling extended consolidation

* Going ahead, we maintain our positive stance, however couple of weeks of breather can not be ruled out, we advise to capitalize such breather as an incremental buying opportunity for up move towards 36200 levels in the coming weeks as it is the 80 % retracement of the February – April 2021 decline (37708 -30405 ) 

* On a smaller time frame the index has witnessed a shallow retracement as it has retraced just 50 % of its May rally (32115 - 35810 ) over past five weeks

* Key observation is price action has been contracting over past few sessions suggesting that breakout from this consolidation is approaching . We expect index to breakout on the higher side given shallow retracement and robust price structure

* The formation of higher high -low in the weekly time frame gives us confident to maintain the support base at 34500 - 34200 being the confluence of the following technical observations :

* (a) The 80 % retracement of the recent up move (33908 -35811 ) placed at 34290 levels

* (b) The value of the rising demand line joining major lows since May 2020 is placed around 34550

* (c) The rising 50 days EMA is also placed at 34622 levels

* In the coming session, the index is likely to open on a positive note amid firm global cues . Volatility is likely to remain high . W e expect the index to trade with positive bias while maintaining higher high -low . Hence after a positive opening use intraday dips towards 35370 -35430 , for creating long position for target of 35670 , maintain a stoploss of 35260.

Nifty Bank Index – Daily Candlestick Chart

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